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Washington energy update

The recent unanimous confirmation of Senator Max Baucus (D-MT) to serve as the new U.S. Ambassador to China resulted in a chain reaction of events in the Senate. Montana Lieutenant Governor, John Walsh (D) was sworn in as the next Senator from Montana. Further, the Baucus departure created a domino effect with impacts on three Senate committees of significance in the energy/environmental space: Energy and Natural Resources (ENR), Environment and Public Works (EPW) and Finance. With the exit of Baucus as Finance chair, Ron Wyden (D-OR), who up until last week was ENR Chairman, was selected to serve as the incoming Finance chair. Wyden, who brought with him staff from the ENR Committee, has already indicated he will focus on tax reform priorities his predecessor initiated and is likely to receive pressure to give attention to the extension of energy-related expiring tax credits. Mary Landrieu (D-LA) has taken the gavel of the ENR Committee.

The exit of Baucus from the EPW Committee – he was next in line after Boxer – has also created a shuffling of EPW subcommittee chairmanships. Tom Carper (D-DE), current Chair of the Clean Air and Nuclear Safety Subcommittee, is anticipated to now head the EPW Transportation and Infrastructure Subcommittee. Sources indicate that the new chair of the EPW Subcommittee with clean air act jurisdiction could be Senator Sheldon Whitehouse (D-RI). Ed Markey (D-MA) will be coming onto the Committee to fill the Baucus vacancy. The Whitehouse ascension and Markey addition, both progressive members of their caucus and both extremely vocal and partisan in their views regarding climate change, is likely to raise the volume on climate change rhetoric on an already very partisan committee.

In other news this past month, the Senate cleared the Agricultural Act of 2014, popularly referred to as the Farm Bill. The $956 billion bill contains an energy title and only two regulatory relief provisions including a modified provision that creates an agriculture subcommittee on the Environmental Protection Agency (EPA) Science Review Board. The second, in a wide-ranging victory for the timber industry, permanently bars the use of permits for forest roads and silviculture activities and permanently bars citizen enforcement suits for any non-permit measures adopted by EPA. The President, at a Michigan signing ceremony, signed the much negotiated bill on Friday February 7, 2014. House Republicans boycotted the President’s signing ceremony.

The House and the Senate are both in recess this upcoming week.

Items of Interest

Waxman January 30, 2014 Retirement Announcement Prompts Pallone and Eshoo to Energy Contest for Leading Democrat on the Powerful Energy and Commerce Committee. With Waxman’s retirement announcement less than three weeks old, two senior Democrats on the House Energy and Commerce (E&C) Committee – Rep. Frank Pallone (D-06-NJ) and Rep. Anna Eshoo (D-18-CA), have each announced their interest in taking over as ranking member of E&C. Pallone and Eshoo, while both senior respectively in terms of E&C seniority, rank behind John Dingell (D-12-MI), who lost his battle to chair the powerful committee to Waxman in 2008. Dingell is currently Chairman Emeritus, an honorary position, and has not expressed an intention to contend for the ranking member position. Pallone and Eshoo, both part of the progressive wing of the House Democratic caucus, are not members of Waxman’s House Democratic Climate Change Caucus, although both supported passage of the Cap and Trade legislation in 2009. Eshoo has been traditionally close ally of House Minority Leader, Nancy Pelosi (D-12-CA).

E&C Subcommittee on Oversight and Investigations to Examine Department of Energy’s Carbon Capture and Storage (CCS) Activities. The House Energy and Commerce Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-18-PA), last week examined the current status of DOE’s clean coal programs with an objective of learning more regarding DOE’s priorities as they relates to research and development, current project demonstrations and upcoming timeframes with regard to programs to support the advance of CCS technologies and their future commercial availability and deployment. Questions regarding the commercial availability of CCS technology have been central to the discussion regarding the viability of the Administration’s recently published carbon reduction standards for new coal fired generating stations. Only DOE witnesses testified. Sources indicate that given some of the responses provided at the hearing, DOE could be called to further testify or clarify certain items for the record.

Four Senate Democrats Question Need for Stronger Security Standards for Nation’s Electric Grid. Senators Reid (D-NV), Feinstein (D-CA), Wyden (D-OR) and Franken (D-MN) sent a letter on Friday, February 7, 2014, to the Federal Energy Regulatory Commission and the North American Reliability Corporation asking for a closer look to determine whether stronger security standards were necessary. The letter came as a result of a 2013 physical attack on a California Pacific Gas & Electric substation that yielded significant monetary damages. The Senators remain concerned that the current voluntary standards are insufficient.

Environment and Public Works Committee Approves EPA Office of Water Nominee, Ken Kopocis. First nominated in the 112th Congress, Kopocis, a former long time senior staffer on the House Transportation and Infrastructure Committee, was approved last week by the EPW Committee. In the 112th Congress, various Republican EPW members had placed a hold on his nomination as a result of the administration’s policies as they related to Waters of the U.S. guidance. With the adjournment of the 112th Congress, the Kopocis nomination lapsed. The administration is no longer considering Waters of the U.S. guidance, but instead a Waters of the U.S. rulemaking is making its way through the interagency federal process. It is unclear when the Kopocis nomination will be considered on the Senate floor and how the potential rulemaking will impact his nomination.

Senator Murkowski (R-AK) Releases Electric Reliability White Paper. Senator Murkowski, senior Republican of the Energy and Natural Resources Committee, released a white paper last week entitled “Powering the Future: Ensuring That Federal Policy Fully Supports Electric Reliability.” The White Paper emphasized the need to maintain electric grid stability, notwithstanding the change in energy mix, as a central challenge in ensuring reliability in the future. It emphasized the need to have a diversity of baseload capacity and robust transmission and distribution systems as necessary to secure grid reliability. Further the white paper called on the federal government to consider the impact of new regulations on the grid. The paper recommended a number of action items:

Points to the need to replace retiring baseload capacity, while managing an increasingly variable energy mix.

Urges policymakers to use their oversight authority to gather facts concerning the impact of government requirements on baseload capacity and the reliability of the grid.

Calls on federal agencies to formally review and recognize the realistic and predictable consequences of their regulatory actions with the dual goals of prevention and mitigation. Suggests that the Federal Energy Regulatory Commission must be the unambiguous champion of reliability.

Urges that regulatory and legislative reforms be considered to ensure a more robust role for electric reliability professionals in evaluating environmental rules.

If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work.

Sidley’s Government Strategies group works at the crossroads of law and policy, helping clients develop and implement strategies which protect and further their business interests. Multiple institutions influence the development of federal law and policy– including the Legislative, Executive and Judicial branches of government as well as the private and non-profit sectors. The professionals in our Government Strategies practice work with our clients to assist them in understanding and managing these multiple influences in a successful manner. Our group features a 28 year veteran of the US House of Representatives who chaired the Energy and Commerce Committee’s Subcommittee on Energy and Air Quality, a former chief counsel of the EPA and a former senior policy advisor to the EPA Administrator. These professionals provide services to a variety of energy clients.

Sidley Austin provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship.

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